Woooah~ I'm impressed that you know all that. Anything related to metals, chemistry, and science is beyond me. Violence, though, I grasp... and food.
The weapons Kyal makes are only for Kyalians; they don't export them unless they're special "purdy weapons." Like ridiculously ornate daggers and swords. It is the gems that Kyal wants to be the main exporter of. I saw lots of countries with ores as exports, but only Valkyr has lots of gems. Am I wrong? If there's another big exporter of gems, Kyal will have another competitor. I shall go check again.
You're right, though, in the suggestion that Valkyr and Kyal could help each other even while they compete in the trading of gems. They are alike in several ways, just one of which being their neutrality. What do you suggest they aid each other with? Since Valkyr is so focused on strength and skill in battle, do you think that they might want to learn Kyal's traditional form of fighting? It isn't fully known by anyone that is not Kyalian. I know that Kyalians are always up to physical challenges, so they would probably enjoy learning a new way of battle.